China blocks India’s $60-m project for Arunachal

April 15, 2009

Pranab Dhal Samanta
Indian Express
April 14, 2009

New Delhi -- Days after it objected to President
Pratibha Patil’s visit to Arunachal Pradesh,
Beijing has stunned New Delhi at the Asian
Development Bank (ADB) by blocking India’s
development plan because it contained a $60
million project for Arunachal Pradesh.

China is learnt to have held back its approval at
the ADB Board saying it could not clear a plan
containing a programme in a “disputed territory”.
Thus, Beijing has, for the first time, escalated
the bilateral Arunachal Pradesh issue to a level
involving multilateral institutions.

New Delhi’s made it clear to the ADB that there’s
no question of removing the Arunachal project
from the plan. It has argued that ADB cannot
allow its forum for bilateral issues and link these to its lending policies.

The Chinese move is also seen as a disturbing
pointer to what could lie ahead given that the
world is bracing for a more “expanded
involvement” of China in the IMF and the World Bank.

Matters came to a head when India’s strategy
paper for 2012 came up at the board meeting on
March 26-27. Among the largest recipients of ADB
loans, India had drawn up a $2.9-billion
programme in consultation with the Bank and this
included a watershed development project in Arunachal Pradesh.

China has used its right to postpone a matter in
the board. Given that Beijing’s the largest donor
after US and Japan to ADB, it’s clearly using its
clout. India is next only to China and is leaning
heavily on board members to not let Beijing get its way on this issue.

The World Bank has a policy on funding projects
in disputed areas that only requires making a
note of it before granting approval. India feels
ADB could consider such a policy.

India and China had agreed in the two
high-profile visits of former PMs Rajiv Gandhi
and Atal Behari Vajpayee that they would not
allow contentious issues like the boundary
dispute to impact progress on other fronts,
particularly economic relations. In 2005, the two
countries reached an understanding which included
safeguarding “due interests” of settled populations.

All of this unraveled when Chinese Foreign
Minister Yang Jiechi told Indian counterpart
Pranab Mukherjee that “mere presence” of
populated areas would not affect Beijing’s
claims. Since then, China has hardened its position.